Shocking report from China is a "must read" for gold and silver investors
Shocking report from China is a "must read" for gold and silver investors
Tuesday, September 18, 2012
This is a very interesting story out of China that should serve as a canary in the coal mine for precious metals investors everywhere. Basically, it appears that banks and other companies that have lent money to China's steel sector with warehoused steel used as collateral have discovered that the steel in many cases is not even there!
If I am reading this correctly, not only were these lenders in trouble due to the cataclysm that is the Chinese steel sector, but their collateral that they assumed would be some cushion is also gone.
From the Reuters article:
Chinese banks and companies looking to seize steel pledged as collateral by firms that have defaulted on loans are making an uncomfortable discovery: the metal was never in the warehouses in the first place.
"Fake warehouse receipts have become a problem for some banks and because of this, many banks have boosted monitoring of existing stocks at warehouses and temporarily stopped accepting steel stocks as collateral for loans," said a Shanghai-based branch manager from a Chinese bank who declined to be identified as he was not authorized to speak to the media.
There is one major lesson to be learned here for all precious metals investors...
Read full article...
More on precious metals:
Casey Research: Three reasons you must own gold now
What you need to know about gold, the dollar, and the euro
Doc Eifrig: The two things your broker doesn't know about silver
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Shocking report from China is a "must read" for gold and silver investors
"Should serve as a canary in the coal mine for precious metals investors everywhere..."
Regards,
Justin Brill
Managing Editor, The Daily Crux
www.thedailycrux.com
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